Debt Arrangement Scheme
An alternative debt solution in Scotland is the Debt Arrangement Scheme (DAS). This is a government-run debt management tool that allows you to repay your debts through a debt payment programme (DPP).
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Similar to a debt management plan, a DPP in Scotland allows you to pay off your debts in full over a reasonable period of time. All interest, fees and charges on the debt will be frozen. You’ll also be protected from any legal action by your creditors to recover what you owe them.
To qualify to enter a DPP under the Debt Arrangement Scheme (DAS) you must:
- Be resident in Scotland
- Have one or more debts that you’re struggling to repay
- Have a reasonable level of spare income available to repay your debts, after paying for your basic living expenses
- Not be in a Protected trust deed, bankrupt, or subject to a bankruptcy order
- DAS can now be set up and administered by PayPlan.
- There are no fees the client will need to pay.
If you are not able to repay your debts in a reasonable length of time then other debt solutions might be more beneficial – such as a trust deed or sequestration (the Scottish form of bankruptcy).
How it works
A DPP under the Debt Arrangement Scheme (DAS) must be setup and managed by an approved money advisor.
They will discuss your income and expenditure to determine how much surplus income you have and whether you are suitable for DAS.
The details of your DAS DPP proposal are then sent to all of your creditors that you include in the DPP. The information in the DPP will clearly state:
- The total amount of money you owe
- The agreed repayment amount for each instalment
- The frequency of the proposed payments
- The proposed length of your DPP
If some of your creditors have already started court action against you, joining DAS will, in most cases, stop this from going any further.
If your circumstances change, then you may be able to apply for a variation to your DPP. This can happen if an income shock – a reduction in your disposable income – makes the DPP unmanageable.
You will need to discuss this with your money advisor and in certain circumstances, you can apply for a payment holiday of up to 6 months if your disposable income has reduced by 50% or more for the following reasons:
- Unemployment or charge in employment
- Leave of employment for maternity, paternity, adoption or to care for a dependant
- A period of illness
- Death of person you shared care with (financial or otherwise)
The payment holiday will extend the DPP by the same period and, provided you meet the criteria necessary, there is no limit to the number of times you can apply for one.
Depending on your situation, there may be other debt solutions that will better suit your needs. Including:
Advice on Debt Arrangement Schemes
If you’d like to find out whether a debt payment programme through the Debt Arrangement Scheme is the right solution for your personal situation then you can call PayPlan free on 0800 280 2816 or use our online Debt Help Form to seek more information.
If a DPP is the best solution for you, we will help you to find a free DAS approved money advisor who will be able to arrange one for you.
How could DAS benefit you?
- Frozen interest rates and charges
Interest rates are frozen while you are in a DPP allowing you to pay off your debts at a faster rate.
- No time scale
There is no time limit with DAS. You can make the reduced payments for as long as you need. If it would take you a while to pay back your debts this way, when you contact PayPlan we might suggest other options.
- Assets are protected.
One of the advantages of the debt arrangement scheme is you won’t have to worry about your assets. Unlike other debt solutions your assets are protected throughout your DPP.
- It’s affordable
A DPP is designed to allow you to pay what you can afford to your creditors – with a DPP you pay one reduced monthly payment for as long as you need to.
How about the small print?
Like most debt solutions, as you are making reduced payments to your creditors your credit rating will be affected. A DPP will be on your credit file for six years from its approval or until your plan has been completed. As DAS is a formal solution, it will also be recorded on a public register.
You will have to pay off all of your debts – there is very little opportunity for debt write off. Only after 12 years does it become a possibility – if you have paid off 70% of your debts for this duration you can request for your debts to be written off.
- Will a DPP (debt payment programme) affect my credit rating? Your details will appear on the DAS register, which can be accessed online. It is often used by credit reference agencies to update your credit file and to reflect this information.
- Will DAS cost me anything? Free and impartial advice is available from a DAS approved money adviser at local authority money advice units or Citizens Advice Bureau however, some other organisations may charge for this.
- Can I end my DPP payments early? The DAS Administrator or your money advisor can ask creditors to accept less than the full amount owed to them. This is called offering a ‘composition’ and if it is accepted by all your creditors, will end your DPP with nothing more to pay.
An offer of composition can only take place if:
- You have paid 70% of the amount owed when you started
- You have made a full 12 years of payments (not including payment breaks)
Call PayPlan free on 0800 280 2816 or use our online Debt Help Form for free advice on debt solutions in Scotland.